NJ Senate President’s Delusions On Pensions Exposed

In a special edition of State of Affairs, Steve Adubato and New Jersey Senate President Steve Sweeney discuss the most pressing issues facing New Jersey lawmakers today including the public employee pension crisis and we all get a lesson as to how New Jersey got to be the sponsor of the worst funded retirement system in the country:
.

.
The commercials were all for Steve Adubato. Returning for the final minute:
.

.
This guy (on the right) is supposed to be working on solutions! With this information in his head! If he only knew…..

  1. The 2011 reforms primarily had to do with taking away cost-of-living-adjustments from everybody. Since we have been in a low interest rate environment where COLAs would have been 60% of the CPI it has saved maybe $1 billion in total so far.
  2. That $120 billion figure circulated is without taking into account the time value of money and might be accurate over a 70 year time-span, which this plan certainly does not have.
  3. Benefits currently being paid to retirees come to almost $1 billion per month. Where is that $1 billion a year budget item if “they hadn’t screwed around with the pensions in the past” coming from?
  4. Going to career-average salary is a fine idea but, since it surely will only apply to new hires, that means it won’t make any noticeable dent in payouts until around 2043.

6 responses to this post.

  1. Posted by Tough Love on April 21, 2018 at 10:59 pm

    John, That $1 Billion est of COLA-saving since 2011 seems awfully low ……

    With about $11 Billion in annual payouts and the CPI up about 9% since 2011 the incremental payout NOT MADE in 2017 alone is about 60% x 0.09 x $11 Billion = $594 Million.

    His $120 Billion savings figure likely also assumed about 3% annual inflation (about double what it has been since 2011).
    ———————————————————

    As I have stated (to Stephen Douglas’s chagrin) many times, there are NO SOLUTIONS to NJ’s pension mess that do not include (just as ONE of numerous necessary steps) either a hard freeze of the DB pension for the future service of all CURRENT workers, or if that simply cannot be done, a reduction in the VALUE* of future service accruals by AT LEAST 50%.

    * VALUE ….. by a combination of:

    (a) reducing the formulas factors
    (b) increasing the minimum age at which an unreduced pension can begin
    (c) using actuarially correct early retirement reduction factors, NOT the heavily subsidized factors in place today,
    (d) making disability retirements MUCH MUCH more difficult to OBTAIN and to KEEP
    (e) NOT reinstating COLAs until the funding ratio EXCEEDS 100% for 3 years and thereafter and STAYS over 100% for COLAs to continue

    Reply

  2. 3. I assumed what he meant was IF they hadn’t screwed around in the past, the pension would be fully funded, in rough numbers, at $217 billion(PEW 2015?) IF that earned the ideal 7 percent ROI, there’s $15 billion annually to pay out current pensions.

    That’s what my wife calls “IFcome”, and you literally can’t take it to the bank.

    Reply

    • Posted by Tough Love on April 22, 2018 at 10:06 am

      And if NJ’s campaign-contribution-BOUGHT Elected Officials had never promised such Ludicrously excessive pensions ….. instead promising ones comparable in value to what Private Sector workers typically get from THEIR employers in retirement security …… the contributions that have ALREADY been made would likely have been sufficient to FULLY fund such pension promises.

      Reply

  3. Posted by Anonymous on April 22, 2018 at 7:51 am

    I seem to recall that way back when Sweeney was pushing to reform the pensions as they were in bad shape for quite some time. I think he was proposing DC or some type of 401K similar to what the Ironworkers have……….obviously he was shot down and now we have this debacle…….

    Reply

  4. Posted by Anonymous on May 2, 2018 at 6:18 pm

    That that all state workers where’s the weed

    Reply

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: